Brazil Approves Tax Incentives to Begin iPad Production as Apple Targets its Next Major Market

Brazilian newspaper Folha reports [Google translation] that the Brazilian government has officially approved tax incentives that will allow Foxconn to begin producing iPads in the country. Interministerial Ordinance #34, signed on Monday and published in Brazil's official register today, specifically provides for a reduction in or exemption from certain taxes associated with the production of touchscreen tablet devices lacking a keyboard and weighing less than 750 grams.

According to ministerial decree 34 published Wednesday in the "Official Gazette", the company will be entitled to the benefits provided for in Decree 5906 of September 2006.

The determination provides for exemption or reduction of the IPI (Excise Tax), PIS and Cofins for companies investing in research and development of technology products.

The iPad 2 of course fits within those specifications, weighing in at just over 600 grams with only slight variation among the various models. The ordinance also permits the production of accessories, cables, power supplies and manuals associated with the allowed tablet devices. While the ordinance applies generically to tablet devices, it has clearly been written to support Foxconn's plans for the iPad.

Last April, Foxconn announced a major push to bring iPad production to Brazil, but the company's efforts were slowed as it negotiated with government officials over tax breaks and other issues. As recently as October the company had signaled its intention to begin production by December, and while the company has missed that target it now appears ready to move forward.

foxconn brazil iphone factory
Foxconn's Brazilian iPhone and iPad factory (Source: Cult of Mac)

The launch of iPad production in Brazil comes at a key time for Apple, as CEO Tim Cook noted just yesterday during the company's earnings conference call that Brazil is its next area of emphasis after China among the "BRIC" countries with newly advanced economies. Russia and India are the other two countries in that grouping and Cook acknowledged that Apple has begun to "go deeper into Brazil" as its next target, although he cautioned against any expectations of Apple retail stores arriving in the country over the near term.

High import taxes on foreign-made goods have prevented Apple from making significant inroads in Brazil, with iPad pricing currently starting at the equivalent of US$925 for the 16 GB Wi-Fi iPad 2. With Foxconn moving iPad production to Brazil under the new tax incentives, Apple should be able to offer more competitive pricing on the device as production ramps up. Photos of a Brazilian-made 8 GB iPhone 4 showed up in late November, suggesting that Foxconn is also ramping up domestic production of new iPhone devices for Brazilian customers.

Related Roundup: iPad
Tag: Brazil
Buyer's Guide: iPad (Buy Now)

Top Rated Comments

Audioslave Avatar
117 months ago

Great News Indeed!

Now The US Government should start tempting Apple to do more in the USA with tax incentives.


I think that, with a gross margin of 44.7 percent, it wouldn't hurt if Apple paid some taxes.
Score: 15 Votes (Like | Disagree)
entropys Avatar
117 months ago
Macduke, the price of an iPad in Brazil would have as its base point the basic world price of an iPad. Like every other country, this will vary according to local selling cost factors. So, whatever the price in Brazil, it will have nothing to do with how much Yanks pay for an iPad.

Brazil is doing what a lot of countries have tried over the years, placing massive tariffs on imported manufactured goods in an attempt to create a local industry. All that happens is that the international producer might set up a local assembly shop of (mostly) imported parts to avoid the taxes, and pockets higher margins in economic rent as even without the tariff higher than world prices can still be charged (there is no competition from imports to keep them honest). They can even get away with a lesser product because the tariff wall protects them from the higher cost to make latest tech (note Brazil currently makes iPhone 4, not 4S).

This strategy never works of course. If the prop of the tariff wall is ever reduced, the local arm of the businesses' first strategy is to squeal a lot, seeking a reinstatement of the tariff or government subsidies instead. And of course, the second strategy is to wind up local operations as the local business structure is uncompetitive with imports, molly coddled as it was behind the tariff walls. In the end all that happens is that the local consumer has over the years paid billions of dollars extra for products that are always just one step behind in a technological sense.

I know this because my own country pursued this exact same strategy sixty years ago, promising a glorious future in manufacturing, but really only leading to a brake on living standards that reached its lowest point in the seventies which only began to be reversed when tariffs started to be cut back. The biggest beneficicairy of our tariff wall was the car industry, which to this day constantly attempts to blackmail government for special treatment. Constantly bleats like a calf being weaned.
Score: 6 Votes (Like | Disagree)
andrewlgm Avatar
117 months ago

This is great news!

I don't see why this is great news - economically speaking. It's great for Brazilians, sure, but still pretty bad for us back in America. The reason why Brazil has such high import taxes is precisely for this - to bring companies into the country. As its employment and education numbers rise, and the number of people living in misery fall - almost 30 million in the past decade have joined the middle class - the purchasing power increases. Therefore if companies want to profit from the country joining the developed world - they will have to go and manufacture there. Three years ago the price of a macbook pro in Brazil was going for $13,000 reals - an estimated $7,000 dollars.

Perhaps we ought to do this here, place heavy import taxes on products manufactured in China, India, Brazil, etc, raising the price of the simplest macbook pro and other similar computers to $2,000 or more and we'll see apple moving back to manufacture in the US. That's what the government should have done 10 years ago when manufacturing jobs started disappearing as a result of free trade signed in the 90s, and not ask Jobs "what can be done to bring Apple back to the US?"
Score: 6 Votes (Like | Disagree)
Les Kern Avatar
117 months ago

Great News Indeed!

Now The US Government should start tempting Apple to do more in the USA with tax incentives.

Horse Manure. Spend a few seconds on research next time. Brazil got that factory SIMPLY BECAUSE Brazil has a 49% tariff on all imported electronic goods, and it was cheaper for Foxconn to built a plant and hire local labor AT A LIVING WAGE than to ship and pay that tariff.
But here, no, we eliminated all tariffs that protected US workers, instead giving tax breaks to Apple and every other manufacturer that sent jobs overseas, thus the ongoing destruction of the middle class here. I am TIRED of subsidizing Apple's goddam business. Recently I saw that if iPads were made here they would be about 20% more expensive. I'd feel better paying that knowing Apple was doing the right thing by supporting OUR workforce and OUR country instead of being part and parcel to ****ing slave labor, plus the PR would be phenomenal for them. But no, the shareholders rule, and Apple will horde that 97BN like Uncle Scrooge.
Score: 5 Votes (Like | Disagree)
Vtwo Avatar
117 months ago
Really?

I think some of the responses to this thread points out the issue with America/Americans and their problems with unemployment today. It seems that for some people, instead of looking internally to see how America can become more competitive in the global market, they ask Apple to find a 'solution' for them which makes Apple less profitable.

It is like telling someone making $60K a year that they can probably make due with $30K so they should take a $30K salary so the company can hire someone else for $30K. There, unemployment solved. Why don't people do this?
Score: 4 Votes (Like | Disagree)
katewes Avatar
117 months ago
If Tim Cook is such a genius at creative manufacturing, he ought to find a way - when others say it is impossible - to bring back manufacturing to the United States. Experiment. Use automation. Find ways to make things more efficient. Right now, even as a non-American, it sickens me to see Apple's growing pile of cash, and their insistence that Apple cannot manufacture in the U.S.A.

As I see it, if Apple has $99 billion in the bank from manufacturing outside the U.S.A. - wouldn't they still be happy if it had been, say, $50 billion with manufacturing in America. There comes a point there having less profit, but still pretty good profit, is actually better if it brings back not just retail jobs but the whole manufacturing process to America. It's not just jobs, but the technology, know-how.

Germany has maintained its manufacturing base, and it's only corporate greed in America that has prevented it from doing what Germany has done.

American people, think. Imagine this going on for another 30 years, the continual transferring of manufacturing overseas, simply because of corporate greed. America will become another basket-case economy like Russia with its corruption.

I love Apple products, and have for decades - but I loathe Apple's corporate greed.

For me, Apple's grovelling and dry-swimming in its pile of cash is the epitome of everything that is sick in corporate America - the pursuit of cash over any other principle in life.
Score: 4 Votes (Like | Disagree)

Top Stories

lg wing

LG Considering Exit From Smartphone Business, Halts LCD Production for iPhone

Wednesday January 20, 2021 5:38 am PST by
LG is considering exiting the smartphone business entirely amid declining shipments and accrued losses of $4.5 billion over the past five years (via The Korea Herald). LG CEO Kwon Bong-Seok cautioned staff earlier today that the company is re-evaluating its presence in the smartphone industry: Since the competition in the global market for mobile devices is getting fiercer, it is about...
google maps detailed street level e1611052089473

Google Maps Gains Enhanced Street-Level Detail in Four Major Cities

Tuesday January 19, 2021 2:34 am PST by
Google Maps has quietly been updated to include significantly more detailed street-level information in a handful of key cities around the world. Upon zooming in, Google's maps for Central London, Tokyo, San Francisco, and New York now benefit from shapes and widths that match the scale of roads more accurately. Meanwhile, enhanced graphical representations of sidewalks, crosswalks,...
2019 mac pro side and front

Tim Cook Gifted Donald Trump 'First' 2019 Mac Pro

Wednesday January 20, 2021 5:45 pm PST by
Apple CEO Tim Cook gifted former United States President Donald Trump with the first 2019 Mac Pro that came off of the assembly line in Austin, Texas, according to a financial disclosure report that was released today (via The Verge). "Mac Pro Computer, the first created at the Flex Factory in Austin, Texas," reads the entry, which values the machine at $5,999, the base price for a Mac Pro....
airpods max sim ejector

AirPods Max Headband Removable With Just a SIM Ejector Tool, Hinting at Interchangeable Headbands

Tuesday January 19, 2021 8:25 am PST by
It is possible to remove the headband of AirPods Max with just a standard SIM card ejector tool, hinting at the possibility of interchanging headbands to achieve a different colorway. Image via Prelook In December, MacRumors revealed the large variety of AirPods Max ear cushion color combinations when it became clear that they were magnetically attatched and available for sale separately....
iphone 5s black slate

Images of Unreleased iPhone 5s in Black and Slate Shared Online

Sunday January 17, 2021 9:47 am PST by
Twitter user @DongleBookPro has today shared images of a prototype iPhone 5s in an unreleased Black and Slate color. The iPhone 5s was launched in September 2013. The device featured Touch ID, a 64-bit processor, and a True Tone LED flash for the first time. Other new features included a five-element lens with an f/2.2 aperture, a 15 percent larger camera sensor, Burst Mode, and Slo-Mo...
iphone 12 vs iphone 12 mini

Apple Shifting Some Production From iPhone 12 mini to iPhone 12 Pro to Meet Demand

Wednesday January 20, 2021 8:12 am PST by
Apple has reportedly cut production of the iPhone 12 mini by two million units to create more manufacturing capacity for the iPhone 12 Pro, according to a new Morgan Stanley investment note seen by PED30. Apple is believed to have made the switch for the first quarter of 2021 in an effort to combat continuing lead times for the more popular iPhone 12 Pro. iPhone 12 Pro lead times remain ...
Apple VR Feature

Bloomberg: Apple's First AR/VR Headset 'Pricey, Niche Precursor' to More Ambitious AR Glasses and Could Launch Next Year

Thursday January 21, 2021 3:27 am PST by
Apple's first virtual reality headset will be a "pricey, niche precursor" to a more ambitious augmented reality product, according to a new report from Bloomberg's Mark Gurman. As a mostly virtual reality device, it will display an all-encompassing 3-D digital environment for gaming, watching video and communicating. AR functionality, the ability to overlay images and information over a view...
shot on iphone 12 apple

Apple Highlights Photos Shot by iPhone 12 Users: Portraits, Cityscapes, and More

Tuesday January 19, 2021 6:05 am PST by
Apple today shared a gallery of photos shot by customers using the iPhone 12 mini, iPhone 12, iPhone 12 Pro, and iPhone 12 Pro Max, with scenes including cityscapes, landscapes, portraits of people, and more at day and night. Shot on iPhone 12 Pro Max by "NKCHU" in China (top) and shot on iPhone 12 Pro Max by Rohit Vohra in India (bottom) iPhone 12 mini and iPhone 12 models have a dual camera ...
Apple and Hyundai feature

Apple Car Production Again Linked to Kia Motor's US Plant in Georgia

Tuesday January 19, 2021 4:19 am PST by
Hyundai intends to transition the company's Apple Car involvement to its Kia brand as part of an internal arrangement that could see production move to the U.S., according to a new report today. On Sunday, Korea IT News reported that Apple and Hyundai are seeking a partnership agreement for the upcoming Apple Car by March, and that the electric vehicles could be made at a Georgia factory...
iPhone 13 Notch Feature

iPhone 13 Rumored to Feature Smaller Notch, Pro Model Cameras to Use Larger Image Sensor

Thursday January 21, 2021 1:38 am PST by
Apple's iPhone 13 series will feature a redesigned Face ID system that will allow for a smaller notch at the top of the screen, according to a new report today. The rumor comes via hit-and-miss Taiwanese industry publication DigiTimes, whose supply chain sources also claim that the ultra wide-angle lens in Apple's next-generation iPhones is due for an upgrade. The next-generation iPhones'...